Pub group Enterprise Inns said it was still exploring the possibility of converting to a REIT, despite receiving a set back from Revenue & Customs yesterday.
Revenue and Customs said that Enterprise could not convert to a REIT in its current form, because ‘wet-rent’, beer sales to the tenants of its pubs, did not constitute rent under REIT legislation.
Still in talks
Chief executive Ted Tuppin said: ‘We are currently exploring with HMRC whether an internal restructuring of the group’s activities, currently being considered by the board… would result in the group becoming eligible for admission to the REIT regime.
‘It’s a very complex issue, but we’re still talking to Revenue & Customs. Our financial advisers still seem confident that we can qualify for the scheme.’
M&B press on
Next Thursday, Mitchell & Butlers are expected to announce the result of their own review into whether to spin off its property assets into a REIT.
The company said in September that it was keen to press ahead with plans to create a dedicated property company structure.
Earlier in the year, the company’s proposed £4.5bn property joint venture with entrepreneur Robert Tchenguiz unravelled because of the credit crunch.
In September M&B said that it had suffered a paper loss of £140m due to interest rate hedges put in place to underwrite the transaction.